TELECOMS firm Vodafone says it endured a mixed year after annual earnings fell in the face of continued European revenue pressures.

The group revealed its European division remains weighed down by economic conditions and regulator price changes, though it did grow strongly in emerging markets, such as India.

Bosses said underlying earnings fell 7.4 per cent to £12.8bn for the year to March 31, and expect them to decline further to between £11.4bn and £11.9bn this year as it focuses on a two-year investment programme. The £19bn plan, or Project Spring, aims to improve its network for wider 4G European coverage and 3G coverage in emerging markets.

It is being funded through Vodafone’s £78bn sale of its 45 per cent stake in Verizon Wireless to Verizon.

In the three months to the end of March, Vodafone UK’s service revenues fell 3.6 per cent quarter on quarter to £1.5bn, including the impact of reductions to mobile termination rates.

That compares with a fall of 5.1 per cent in the previous quarter and a 6.6 per cent drop in the fourth quarter last year.

Vodafone was also title sponsor of the McLaren Formula One team, though that agreement finished at the end of the 2013 season.

Chief executive Vittorio Colao said it had been a year of substantial strategic progress, but said operational performance was mixed.

He said: “In Europe, where we continue to face competitive, regulatory and macroeconomic pressures, we have taken steps to improve our commercial performance, particularly in Germany.

“We are beginning to see encouraging early signs.”

The company has launched 4G in its European markets, as well as South Africa, Australia and New Zealand.

It said early experience shows customers use twice as much data compared to 3G usage, driven by streaming.

Smartphone adoption continues to grow in all markets and the increased availability of mobile applications and low cost devices has driven growth in data usage.

Data traffic in India increased 125 per cent year-onyear, and at the end of the year Vodafone had 52 million data customers in India alone, with seven million being 3G data customers.

Group revenues were down 1.9 per cent to £43.6bn, with service revenues off 4.3 per cent.